Berenberg raises target price on Ferguson following 'impressive' Q3 results

(Sharecast News) - Analysts at Berenberg hiked their target price on plumbing and heating products outfit Ferguson from 10,000.0p to 11,200.0p on Wednesday following the firm's "impressive" third-quarter results.
Ferguson reported a 58% jump in third-quarter adjusted operating profits to $767.0m on Tuesday, driven by strong sales growth of 27% and margin expansion.

Berenberg stated that while not "numerically explicit", Ferguson said its "full-year expectations have increased", leading the analysts to hike their 2022 full-year adjusted operating profit estimates to $2.44bn, implying growth of 16% year-on-year, made up of revenue growth of 14% and 20 basis points of margin expansion.

While raising its full-year expectations, the company also reiterated its expectation for growth to slow through the balance of the year as comparatives get more challenging and the favourable cost tailwinds ease.

Berenberg, which stood by its 'hold' rating on the stock, highlighted that its forecasts reflect this profit dynamic with lower margin and organic sales growth over the full-year than reported in the first quarter.

The German bank also added that underlying market conditions in the US remained "very favourable" for Ferguson, with continued strong demand in residential, while non-residential activity experienced "a robust pick-up" compared to the weaker comparative last year.